Insurance policies where premium is above Rs 5L no more tax exempt

Insurance policies where the premium is over Rs 5 lakh will no longer be tax exempt, as per the provisions within the Union Budget 2023-24.

Kapil Mehta, Co-founder, SecureNow Insurance Broker stated the revenue from conventional insurances where the premium is over Rs 5 lakh won’t be tax exempt. While, it will dampen the curiosity of people to purchase excessive worth conventional insurances, it would improve the concentrate on time period plans and pure danger covers which is good.

A priority is that it shouldn’t lead to a big shift in the direction of purely funding oriented unit hyperlink insurances, Mehta stated.

Arihant Bardia, CIO and Co Founder, Valtrust stated if premium paid on insurance coverage policies (excl. ULIP) exceeds Rs 5 lakh in a 12 months, then the proceeds from these policies might be taxable (besides in case of dying profit).

Bardia stated this is detrimental for insurance coverage — as it would influence financial savings merchandise that are often excessive worth and margin merchandise (although not safety). However, smaller policies stay unaffected. Overall a detrimental for insurance coverage corporations as it would influence the excessive worth premium policies — thus impacting general trade GWP progress.

The same provision was already launched for ULIPs in 2021 whereby the combination premium was restricted to Rs 2.5 lakh in a 12 months for tax exempt proceeds”, stated Bardia.

Mehta stated enhancements in ease of doing enterprise particularly, the adjustments pertaining to simplification of the KYC course of, one cease answer for identification and handle updating, widespread enterprise identifier, unified submitting, and entity digilocker will make placement of insurances simpler. Claims cost would even be facilitated.

Changes in private revenue tax will improve private disposable revenue. This will lead to people skill to purchase higher, greater worth insurances to handle their danger, Mehta stated.

(With inputs from IANS)